Petrol going to N720 a litre as naira suffers, marketers say

The retail price of petrol in Nigeria is bound to rise to between N680 and N720 a litre in the coming weeks if the dollar continues to rally against the naira, fuel marketers have said.

The news comes as prices have continued to rise in the country following the removal of petrol subsidy and currency reforms. Millions of Nigerians have struggled with daily needs as inflation surges.

Immediately after the new government of President Bola Tinubu scrapped subsidies on May 29, the price of petrol rose to N537 from N185.

The price later rose to N617 after the Central Bank of Nigeria’s decision to allow the naira to trade more freely failed to make dollars more available. The International Monetary Fund has warned that it may take up to 18 months for the naira to stabilize.

Since the reforms, the naira plummeted from N464 to more than N780 at the official market. Last week, it reached N955 at the black market, where many importers source forex from.

Marketers say things will soon get worse if the federal government fails to intervene.

– Expect up to N720

“Once there is a slack in the naira against the dollar, there is going to be an effect. The demand and supply of forex is a key factor. We should also understand that it is not only petroleum products that use forex,” Chinedu Ukadike, national public relations officer of Independent Petroleum Marketers Association of Nigeria, told Punch.

“It is simple mathematics, once the dollar is going up, have it in mind that the prices of petroleum products would definitely increase because the products are dollar-driven.”

“Nigerians should brace for a price regime of between N680 to N720 if the exchange rate stays around N910 to N950/$, but the price is going to hit N750 once the dollar rises to N1,000,” he said.

“This is because marketers still source dollars from the parallel market, and not only marketers but virtually all importers in Nigeria. There is no subsidy any more on petroleum products, so you expect the cost to fluctuate with the dollars.”

He said a price rise will likely begin with the state-owned NNPC, which remains the major importer of petroleum products.

Clement Isong, the executive secretary of Major Oil Marketers Association of Nigeria, said traders were still not importing petrol after the government issued licences to private marketers because it is difficult to get dollars.

“The I&E window is illiquid. There’s no money there. To buy products, it costs you between $25m to $30m. You can’t find it in the I&E window. So it doesn’t work and that is why people are not importing,” he told Punch.

“We can’t find dollar again; you can’t find it right now. Nigeria has to sort out the security issues in the Niger Delta so that we can increase our daily crude oil output. If we increase it to 1.8 or two million barrels per day, then there’ll be dollar in the market. So we need to stop oil theft.”

– Government intervention

He said the government needs to intervene.

“Well, the president himself said in his speech that if they find petrol prices moving too high, they would intervene. We don’t want prices to move too high, nobody wants that.

“So, if the dollar continues to climb, we are expecting some sort of intervention from the government based on what the President said,” he said.